BRUSSELS PROPOSALS CONTRADICT UK POLICY FOR DELIVERIES TO ALL ADDRESSES AT

The European Commission’s blueprint for postal services in Europe sharply contradicts Government policy to ensure UK consumers and businesses can continue posting mail to all 27 million addresses nationwide at a uniform and affordable price, The Post Office told a Lords committee today.

Post Office Chief Executive John Roberts said the proposals from Brussels would, if implemented, give a green light for “cream skimmers” who had no interest in maintaining the universal, uniform-price service to every address.

People living in rural areas would be the biggest losers, while individual postal users throughout the UK would face the prospect of steep increases in postage, said Mr Roberts.

“There is an opportunity to introduce more competition in the postal sector throughout Europe in a way that would bring real benefits to customers through the EU,” he told the Lords European Union Committee.

“But the Commission’s draft directive on postal service threatens to destroy The Post Office’s ability to continue to provide the valued delivery service to every address, six days a week at a uniform, affordable price.

Customers throughout Europe will be the losers.

The Commission’s proposals run a very real risk of damaging postal services in the EU.” The Lords committee is conducting an investigation into the European Commission’s draft directive on postal services, which proposes that from January 1 2003, all mail in the EU weighing more than 50g should be open to full competition.

The current weight limit in the EU level for full competition is for mail over 350g.

In the UK at present, a basic First class (27p) stamp, and a basic Second class stamp (19p) covers letters weighing up to 60g – more than the Commission’s 50g proposal.

The Post Office, which was among the first EU postal authorities to support liberalisation of mail services, has proposed that the current 350g limit be lowered to 150g from 2003.

Mr Roberts said: “Our proposal is a substantial step which would introduce significantly more competition throughout the EU.

If the Commission’s proposals for a 50g threshold become law, then it could push The Post Office into a loss.

This would undermine The Post Office’s ability to meet the social obligation laid down in the Postal Services Act 2000 to deliver mail to all of the UK’s 27 million addresses, no matter how remote, at a uniform and affordable price.

“There is, therefore, a large potential conflict between the Commission’s proposals and the policy framed by the Government in the Act,” said Mr Roberts.

He said the Commission itself had foreshadowed substantial conflict between competition and the uniform price requirement of a universal service obligation.

“The Commission’s view sharply contradicts the policy position of the UK Government, whose commitment to universal services at uniform and affordable tariffs has only recently been enshrined in the Postal Services Act 2000,” said Mr Roberts.

“The Commission are clearly more interested in introducing more competition than in ensuring the maintenance of a universal service at a uniform price.” “The great danger in the Commission’s proposals is that it would lead to classic cream-skimming in countries, such as the UK, committed to deliveries to all addresses at a uniform price.

Profits currently used to cross-subsidise rural consumers would instead be taken by competitors who have no incentive either to offer a universal service or be efficient.” Mr Roberts added that The Post Office’s 150g proposal was based on detailed studies.

There was also ample evidence that full competition in postal services would lead to substantial price rises.

Since Sweden introduced full competition into its postal sector in 1993, the basic price of a stamp had risen 59 per cent in real terms.

While Swedish businesses sending large amounts of mail to towns enjoyed lower prices, they had to contend with a complex tariff structure where the